CARE Ratings has downgraded the outlook for state-run West Bengal State Electricity Distribution Company (WBSEDCL) to negative from stable due to the discom’s failure to revise its tariff since October 2016, resulting in a widening gap between the cost of supply and approved tariff. The agency has assigned BBB- rating to the company’s bond issue revising it from BBB+. In the case of West Bengal State Electricity Transmission Company (WBSETCL), the rating has been revised from A to BBB+ since 90% of the transmission company’s business depends on WBSEDCL.
Although CARE pointed out to an improvement in interest coverage ratio, the company had a debt repayment obligation of Rs 2,200 crore in FY19, of which Rs 604 crore was backed by government guarantee. The company’s liquidity position is at ease with a cash of Rs 861 crore and undrawn credit of Rs 1,382 crore, according to CARE.
